One in 8 Auckland homes on market were bought during boom, may now sell for loss
New data shows one in every eight Auckland homes going on sale is at risk of selling for a loss or minimal profit.
It comes as a property insider said he is also seeing increasing numbers of homeowners struggle to afford to pay their mortgages.
The data from property website OneRoof shows 13 per cent of almost 11,000 Auckland homes listed for sale in recent months were purchased during the market’s boom period from September 2020 to January 2022.
Prices skyrocketed to a record high of $1.58 million in that period but have since fallen about 19 per cent to about $1.3m, while interest rates have jumped sharply.
This risk of more homes selling for a loss coincides with Loan Market mortgage adviser Bruce Patten seeing a “a big uptick” in people losing jobs and requesting help to lower their monthly payments.
“We’re doing a lot of requests to the banks to switch people to interest-only terms so they can try to make ends meet until the interest rates start dropping,” he said.
“Every week I would be doing probably on average two or three requests to switch, which in normal times we don’t do any.”
One couple Patten recently helped secure an interest-only loan told the Herald on Sunday life can unexpectedly be flipped on its head in an instant.
Both lost their longtime jobs in the past two years, with the woman being made redundant, while two failed surgeries left the man unable to use his hands.
The couple, who did not wish to be identified, had been barely hanging on financially since interest rates climbed.
Patten and other property pundits warn unemployment remains one of the most important indicators to watch for signs that mortgagee sales could rise.
That’s because those losing jobs are typically most likely to be forced into selling their homes when they don’t want to, he said.
National unemployment remains at historically low levels but is rising, with March quarter data described as “gloomier than expected” and coming amid reporting of widespread private and public sector job cuts.
Similarly, credit company Centrix reported the number of people behind in their mortgage payments had jumped to 21,800 in January.
This was up 16 per cent on the same time last year but was still low by historical levels.
We’re doing a lot of requests to the banks to switch people to interest-only terms.
Bruce Patten
Patten also said homes being put on sale so quickly after they were bought was not a direct sign of mortgage stress.
There could be many reasons why recently bought homes were back on sale, including changing circumstances, such as owners looking to change cities or move in with a new partner.
He also said many homeowners have so far been able to absorb the increase in interest rates. That’s because about 40 per cent of owners take advantage of periods when interest rates are low to make higher mortgage payments to pay off their loan faster. That means they’re better placed to absorb increased fees when rates go up.
OneRoof editor Owen Vaughan said not every home bought during the boom has sold for a loss. “A Remuera mansion bought in 2021 for $11m resold in March this year for $12.8m. Some sellers are clearly still seeing on-paper profits in this market,” he said.